8 Ways to Spend the Rebate

The first tax-rebate checks have arrived, and airwaves and chat rooms are singing with advice on how roughly 95 million Americans should spend their windfalls of up to $300 (for singles) or $600 (for couples filing joint tax returns). Pizza Hut has a rebate special of $1 off its limited-time Twisted Crust pie; K-mart is stumping a 5% bonus for taxpayers who drop their entire checks in the blue-light kingdom. Home Depot, after conducting a survey indicating that some 10% of the money will go toward home improvements, is offering to cash rebate checks as long as something is purchased.

President Bush says the $38 billion-plus giveback, the first installment of his 10-year, $1.35-trillion tax cut, will provide a “much-needed shot in the arm” for the faltering economy. Critics wonder if the money wouldn’t have been better spent on other pressing public needs. Here is how some of them would spend the money.

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Sheila Crowley, president of the National Low Income Housing Coalition, Washington, D.C.:

Somewhere around 6 million households in this country, primarily elderly widows and people with disabilities, have serious, serious problems with housing, including 1 million homeless. A rental housing voucher costs the government about $5,600 a year. The $38 billion rebate would cover 6.2 million vouchers, but there is not enough housing stock that accepts vouchers, so you would also have to build new housing units. At an average cost of $75,000 a unit, $38 billion would get you about 500,000. But unless you preserve and modernize existing public and voucher housing, you will lose older units as you gain the new. So if I had this money, I would divide it among new vouchers, new housing starts and preserving housing stock. You could probably build 100,000 new housing units, which wouldn’t solve the whole problem, but would really do a lot. It would more than double the federal public-housing budget of the U.S. Department of Housing and Urban Development, which was just approved by the U.S. Senate, at $31 billion.

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David Burwell, president of Transportation: Surface Transportation Policy Project, Washington, D.C.:

We could use $2 billion to stabilize Amtrak, so it doesn’t go down the tubes. I’d also ask for an additional $10 billion for high-speed rail service--120 mph to 140 mph--in Amtrak’s main markets, including Washington/Boston, Detroit/Chicago/Minneapolis and the West Coast. For $2 billion, we could connect existing rail lines to airports. A lot of double-stack freight containers can’t go through tunnels. We could eliminate these pinch points, and also connect freight lines to other modes of transportation, for about $2 billion. For another $11 billion to $15 billion, we could fund new transit starts for all the districts ready, willing and able to go forward but without the necessary capital. This would include not just heavy rail but light rail, bus rapid transit and trolley projects in places like Austin, Houston, Fort Worth/Dallas and Pittsburgh. Finally, we could spend $5 billion securing abandoned and unused rail corridors. That would add up to about $38 billion, which would still be a fraction of what other countries spend on transportation infrastructure.

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Henry J. Aaron, senior fellow, Brookings Institution, coauthor of “Countdown to Reform: The Great Social Security Debate”:

I’m a strong advocate of using general revenues to fund Social Security, but the tax rebate is small beer. The rebate would make a very modest contribution to the fund’s long-term solvency. Last year, President Clinton proposed annual transfers exceeding $100 billion stretching over 10 to 15 years. The effect of a onetime transfer of $38 billion would perhaps cover one month’s worth of Social Security benefits.

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Anita Garey, sociologist and assistant professor, School of Family Studies at the University of Connecticut in Storrs:

There are 41 million children between ages 5 and 14 in the U.S. Some 33 million children have mothers who are employed, and their most pressing needs are safe, nurturing places to be while their parents are at work. Overall, existing aftercare programs meet only half the need; in urban areas, it’s only 20%. The average annual cost of an after-school program is about $1,000 a child, for three hours of care, Monday through Friday. The $38-billion rebate would come to about $850 for every child age 5 to 14, which, when combined with existing state and federal funds, would go a long way toward providing after-school care.

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Tom Kiernan, president National Parks Conservation Assn., Washington, D.C.:

An annual operating increase of $600 million would fully meet the needs of our national parks, restoring the educational programs and interpretive centers that have been reduced, and better protecting plants and animals. Tackling the backlog of onetime projects, including new visitor centers, would cost $5 billion. For another $1 billion, we could buy all the in-holdings--the land that remains in private hands within national-park boundaries. We’ve proposed a list of 10 new parks, including a northern woodlands park in Maine and a park along the Gaviota coast above Santa Barbara. The initial cost of a new park is generally fairly small. For one of the parks we suggested, the Sonoran Desert National Park and Preserve in southwestern Arizona, the land is all federally owned, military and national wildlife refuge, so there would be no land-acquisition costs. So you could take a fraction of Bush’s rebate and take care of all known needs, and likely future needs, of the park system--and still add new parks.

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Lawrence J. Korb, vice president and director of studies at the Council on Foreign Relations and former assistant secretary of defense during the Reagan administration:

Ironically, the size of the tax-cut rebate is almost exactly the same as what the Joint Chiefs of Staff say the Pentagon needs over and above the current defense budget of $329 billion. For the $38 billion, the Pentagon could buy a large amount of new hardware; in tactical aircraft, it could purchase more than 1,000 of the newest F-16s, 500 new multi-service Joint Strike Fighters, 200 supersonic Air Force stealth F-22s, 500 Navy F/A-18 E&F; Super Hornet fighter bombers, 1,300 Army Comanche helicopters or any combination of the above.

For U.S. maritime forces, $38 billion would buy six new Nimitz-class aircraft carriers, 40 new DDG 51 Class Aegis destroyers, 48 DD-21 land attack destroyers, 17 Virginia-class submarines or more than 200 missile-firing arsenal ships.

For our land forces, one could upgrade every M1-A1 main battle tank and purchase 500 Crusader high-tech mobile artillery systems and still have more than $15 billion left over.

The $38 billion would also fund the budget for military housing for the next decade, pay the cost of military retirement for three years or fund the Pentagon’s health-care budget for two years.

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Howard Gardner, Hobbs professor of cognition and education at Harvard University, and author of “The Disciplined Mind”:

Americans are firmly--and understandably--committed to some kind of accountability with respect to the learning that is, or is not, taking place in our schools. While primary responsibility for education remains at the state and local levels, the federal government is in a position to affect the kinds of accountability that are implemented.

The problem with the current approach is that accountability is located in the wrong place. Either each state is allowed to do its own thing, which encourages game-playing (How can Virginia look better than Maryland?) or the federal government tries to mandate a single testing program that can’t possibly satisfy all major constituencies. Just apply the “Jesse test”: How could one possibly come up with a testing program that would satisfy Jesse Helms, Jesse Ventura and Jesse Jackson?

The $38 billion in tax rebates could help provide the solution to this dilemma. Let’s suppose that American families had a choice of a half a dozen or so different K-12 pathways. One pathway might offer a traditional curriculum (literacies and facts), a second one might emphasize more progressive ideas (individualized learning plans), a third could focus on technology, and so on. Families would select one of these pathways, and the child would under ordinary circumstances remain in that pathway.

The $38 billion could be used to help set up the pathways, to create curriculum and accountability standards, to monitor them, to make sure that youngsters are learning what the pathway promises and, if necessary, to shut down the pathway if it did not meet certain minimal requirements. This approach would satisfy 98% of the population, would ensure continuity even if families moved from one coast to the other, would have authentic accountability and would avoid needless conflict or feckless compromise.

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Steve Hitov, staff attorney of the Washington, D.C. office of the National Health Law Program:

Through the magic of statistics, the Bush administration has decided that instead of 43 million we now have only 39 million uninsured people. The vast majority of them are non-disabled adults under age 65 or children (25%). In 1997, the total Medicaid cost for a child was $1,156 a year; the total for a non-disabled adult under 65 was $1,874. The Feds pay slightly more than half, or under $1,000 a person. Since $38 million is 1/1000 of a billion, the $38-billion tax rebate would pay the federal share of covering every single uninsured man, woman and child in this country for a year. It’s not dollar for dollar, but very close. Ideally, you’d want to make sure it lasted for more than a year, but even on a short-term basis, it would benefit those people enormously.